From simple rice to rice balls(onigiri), soba noodles, sushi and ramen, nori is a national diet which us Japanese cannot live without. Highly favored for both summer and winter gifts, recently nori is expanding its popularity even towards outside Japan. Established as a nori shop in the late Edo period (1603-1867), the company which was always in the top position in the industry through its 168-year history is the Yamamoto Noriten of Nihonbashi, Tokyo. We have interviewed Senior Managing Director Takahiro Yamamoto, future 7th head of company who is currently the head of the sales division, on what the company had inherited beyond generations as their strength, and what they have kept with importance to sustain their business. (interview by Shusaku Hayakawa, business consultant)

High quality product at an affordable price

Hayakawa(H): Having 6th head of an old family business as your father, it may already be your fate to take over sooner or later. Can you share with us on your path since graduating college till now?

Yamamoto(Y): After graduating Keio University, I have spent nearly 4 years working in a major corporate bank. I joined Yamamoto Noriten in October 2008. I went through the experience of opening an onigiri (rice ball) shop in Shanghai 3 months after that, and opening a new shop in Singapore 2 years later. After then became head of sales, and now a Senior Managing Director of the company.

There are many things I was surprised after joining the company. During my days at the bank, I had an obvious mind that earning profit is good. Therefore, in my 1st year at the company when I said “It’s good that cost of nori this year is cheaper than the previous year”, while the accounting manager was agreeing, our purchasing manager would tell me” Yamamoto Noriten, who is the leader of the industry, shouldn’t buy nori so cheaply. It will paralyze the industry’s future”. To hear this was the most shocking experience for me.

The other surprise I had back then, was that we did not have a Management Philosophy any company would have. We even did not have a proper mid-term plan. So, I have conducted an all-hands meeting and partially by force brought our current credo “provide good nori to be eaten by more customers”. My belief still remains the same since, but in due course I would like to have consultants being involved, along with measures including staff surveys, in order to create a better nori.

H: Why do you think the company is lasting for such a long time, even without a clear management philosophy?

Y: First of all, please allow me to explain about nori as a merchandise. In the nori industry, production and distribution is strictly segregated. Makers of nori cannot distribute, and distributors cannot produce. A nori maker’s job will go as far as to get the nori from the sea, mince, and to spread the paste like paper. Distributors like us will buy the nori in such condition, bake, flavor, and cut them according to size. This is the rule.

Nori being such a product with relatively few processes, when someone will praise ”No wonder the nori is good, it’s a Yamamoto”, it simply means we are providing a good quality nori with high cost. Good quality nori being more expensive as cost, we will obviously earn little profit by selling them at an affordable price. I believe this habit of ours “not to make too much profit” is the hidden secret to last such a long period.

Core-competency inherited from my predecessor

H: What do you think is your company’s strength and features?

Y: I will have to explain from our corporate history. Founded in 1849 by Tokujiro Yamamoto at the Muromachi district of Nihonbashi, our company had an innovative head of company in the 2nd generation. First of all, our 2nd head of company invented the “flavored nori”. When the Meiji Emperor (reigned 1867-1912) returned from Tokyo to the old capital Kyoto, our company was ordered by the Imperial Court to prepare gifts for the Emperor to bring with him. This is when the flavored nori was made after a great effort. As you may know, baked nori is eaten in the Kanto region. You can see the onigiris sold in convenience stores are wrapped with baked nori. However, in the Kansai region, flavored nori is standard. It is said that because of our flavored nori invented by our 2nd head being spread from Kyoto into the Kansai region back then, this became the standard of the region. From this point onwards, we were issued the Imperial Warrant of appointment. (system now abolished)

The other thing he did, was to introduce what nowadays we would consider as a marketing method. He had categorized nori into 8 which are, 1. For home, 2. Gifts, 3. Baked nori, 4. Flavored nori, 5. For sushi, 6. For soba noodles, 7. For wholesale, and 8. For tsukudani (preserved food). Naming something without a name is indeed a sophisticated way of marketing! By this, for instance a soba restaurant would say they can find nori for soba if we go to Yamamoto Noriten. For the convenience being recognized, our name immediately spread among people.

Our 2nd head left a phrase; “prepare what the customer wants most at the least possible price”. Later, our 3rd head would come with an even more strict idea “whatever nori distributed under Yamamoto’s brand cannot have a single piece of bad product.”. Such mindsets brought our core competency in business.

H: Categorizing nori into 8 should have been ground-breaking at that time. By the way, how do you grade quality of nori?

Y: What we take as nori from the sea, hides in shells as spores during summer, and leaves the shell when winter approaches attaching themselves into nets. When they start growing buds, we take them as ingredients of nori. When sea temperature goes below 23 degrees Celsius, spores sense coming of winter, and move outside of shell to attach to nets, and start growing buds. The shorter the sprouts, the better the flavor and aroma. What is taken in the first round is called “1st pick”. For a nori producer, a 10cm sprout or a 20cm sprout would only mean the same, but the flavor and aroma is quite different for us. Sprouts will grow again after the 1st picking, as we call them “2nd pick”. Flavor of the 1st pick is far better than the 2nd.

By picking nori sprouts in an early stage while they are still short, obviously the production volume will decrease. In order to have the nori producers pick at an early stage, for example we must offer them to buy a 10cm nori at more than double the price of a 20cm. Otherwise, they will keep growing the bud, and eventually good quality nori will disappear from Japan or elsewhere.

H: Do you mean nori for gifts at Yamamoto Noriten uses only the “1st pick”?

Y: Yes, for most of them. In rare cases, there are sometimes good tasting “2nd pick” nori, so we may reallocate them for gifts. On the other hand, even when we procure 1st pick, we may encounter with sub-standard quality nori. In such case, we would reallocate them for home or industrial usage no matter how expensive the cost was. Even at a loss we will do so. This is our corporate attitude our 2nd and 3rd heads of company left us.

H: Your company is reallocating bad quality “1st pick” nori into a cheaper category! I believe not only newly venturing companies but most of the corporate managements would just try to sell such item as a good product. Maybe this proves that these companies will eventually disappear, and only who insist to do as determined like your company, will prevail.

The doomed 3rd generation direct in line attempt to retain nori culture with passion

H: I do research on old businesses. Do you analyze yourself in comparison with your immediate predecessor?

Y: There’s a saying in family business, “the 3rd generation direct in line will destroy the company”. And another saying; “a son-in-law will grow the business”. As a matter of fact, our 2nd, 3rd, and 4th heads are all sons-in-laws. Our 2nd head introduced flavored nori and the 8 categories, helping our nori earn the Imperial Warrant. Our 3rd head set the unified industry standard size of 19cm x 21cm. and our 4th head launched a branch in Tsukiji. As you can see, we made remarkable achievements when sons-in-laws were heading our business. My grandfather, and father are both direct descendants. Therefore, I am the 3rd direct in line, meaning according to the saying, we are now facing a critical situation! (lol)

However, though they are direct descendants, my grandfather who was the 5th head, expanded our network into department stores growing the business. When we built a new headquarter building in 1965, we have set a drive-thru shop in our parking lot operating till 8pm, continuing the service till 1993 when we started building our annex. When we started the service, department stores had regular closing days, and closed their stores at 6pm, so our products were sold well as gifts for meetings held in evenings, or to shop on a rainy day.

Our 6th head was thinking how to sell nori as a sole product, instead of the existing idea only to wrap onigiri and sushi. He developed “sandwiched nori and Kishu(Wakayama) plum” with the candy company Kanro. It was sold in 2002, becoming a great hit. Thanks to this, we were able to expand our distribution network to supermarkets and convenience stores. In 2009 we introduced “Hello Kitty nori chips” with Sanrio.

Nori Is nutritious, rich in flavor. It matches well with sake or Japanese tea. Currently we are expanding in South East Asian countries such as Singapore, but in places outside Japan where there is no culture to wrap nori onto rice, we find nori rather accepted as snacks, as calories are lower than that of potato chips.

As expected to-be 7th head, my role may not be as significant as what people may call “innovation”. Around me I see old food businesses which started as distribution entering retail, then into restaurants. We already run onigiri shops in Shanghai, but we would like to operate in the way of Subway sandwich. Just like they would provide you choice of what to add in the sandwich bun, we will provide nori, vinegar rice and other toppings to choose from. This is what I would like to try. Redevelopment of Nihonbashi is expected sometime after the Tokyo Olympics. That may be a good timing for this.

H: Which is more important to you; to provide good quality nori and retain the nori culture, or to protect Yamamoto Noriten?

Y: Of course, to retain the culture. My eager to stand in middle of the delicious nori culture and to be involved, is honestly higher than that to protect my family business. I think to retain the delicious nori culture is very important. Even at less profit, we will provide good product to our customers. This will eventually make our family business everlasting. “Gee, I’m sounding a bit cool!”. I thought of myself like so! (lol)

(profile)Takahiro Yamamoto (Senior Managing Director and Head of Sales Division, Yamamoto Noriten)Born in 1983. After graduating Keio University, Faculty of Law in 2005, joined a major bank experiencing corporate sales. Entered Yamamoto Noriten in 2008. In the procurement division went through studying the entire nori business. Later worked at a 100% subsidiary in Shanghai being involved in launch of onigiri shops. As the next head of company, now managing the entire sales of Yamamoto Noriten, as well as involved in activities to penetrate nori culture.